2026 HVAC Tax Credits & Rebates: What WNC Homeowners Need to Know
If you’ve been putting off a new heating or cooling system, thinking federal tax credits would cover part of the cost, we have important news: the federal Section 25C Energy Efficient Home Improvement Credit expired on December 31, 2025. This tax credit is no longer available for any HVAC equipment installed after that date.
But don’t lose hope. There are still pathways to save money on your HVAC upgrade in 2026, and Ward Plumbing, Heating & Air is here to help you navigate them. This guide covers what changed, what’s still available, and how to maximize your savings.
What Happened to the Federal HVAC Tax Credit?
Yes, the Section 25C credit has been repealed and is no longer available in 2026. Here’s what you need to know:
The Section 25C Energy Efficient Home Improvement Credit was a significant incentive that covered 30% of the cost of qualifying HVAC equipment, with these limits:
- Heat pumps: up to $2,000 in credits
- Central air conditioning: up to $600 in credits
- Home energy audits: up to $150 in credits
- Annual cap for most improvements: $1,200
The Inflation Reduction Act (IRA) of 2022 originally extended this credit through 2032, signaling long-term support for energy-efficient home upgrades. However, on July 4, 2025, the “One Big Beautiful Bill” (OBBB) was signed into law, repealing the Section 25C credit effective December 31, 2025. This means no new HVAC installations qualify for this credit as of January 1, 2026.
The Section 25D Residential Clean Energy Credit (which covered solar and geothermal systems) also expired on the same date.
If You Installed Equipment Before January 1, 2026
If your new HVAC system was installed and put into service before the December 31, 2025 deadline, you may still be eligible to claim the credit on your 2025 tax return. Contact a tax professional or visit the IRS website for energy efficient home improvement credits for eligibility details and proper filing procedures.
Duke Energy Rebates: Still Available in 2026
Good news: Duke Energy North Carolina rebates are still active in 2026 and can offset a significant portion of your HVAC upgrade costs. Here’s what’s available:
Heat Pump Rebates
- Qualifying heat pump installation: up to $500 (rebate varies by efficiency tier)
- Must meet ENERGY STAR standards: SEER2 ≥15.2, HSPF2 ≥7.5
- Includes both heating and cooling capability
Heat Pump Water Heater Rebates
- 50-gallon heat pump water heater: up to $500
- 80-gallon heat pump water heater: up to $800
- Must be ENERGY STAR certified with UEF (Uniform Energy Factor) ≥3.3
Central Air Conditioning Rebates
- While specific rebate amounts vary, qualifying central AC systems that meet ENERGY STAR criteria (SEER2 ≥17.0, EER2 ≥12.0) may be eligible for incentives
Important Requirement: Home Energy Check
To qualify for Duke Energy rebates, you must complete a Home Energy Check within 24 months of your equipment installation. This assessment helps Duke Energy verify that your system meets efficiency standards and qualifies for the rebate.
North Carolina’s HOMES and HEEHR Rebate Programs
North Carolina received approximately $200 million in funding from the Inflation Reduction Act to support the HOMES (Home Energy Rebate) and HEEHR (Home Energy Efficient Retrofit) programs. These programs potentially offer rebates up to $8,000 for heat pump installations.
However, program access has been limited and eligibility criteria are strict. These programs are designed to support low-to-moderate income households and may not be available to all homeowners. If you believe you may qualify, check with your local weatherization program or contact Ward Plumbing, Heating & Air for guidance on your eligibility.
How to Maximize Your HVAC Savings in 2026
Even without federal tax credits, there are multiple ways to reduce the cost of a new heating or cooling system:
1. Stack Available Rebates
Combine Duke Energy rebates with any local utility incentives. If you’re installing a heat pump for both heating and cooling, plus a heat pump water heater, you could receive multiple rebates.
2. Invest in ENERGY STAR Certified Equipment
When selecting a new system, choose ENERGY STAR certified heating and cooling equipment. These systems not only qualify for current rebates but will also save you money on utility bills over their lifetime through improved efficiency.
3. Explore Financing Options
Many homeowners are unaware of financing programs that make energy-efficient upgrades more affordable. Ward Plumbing, Heating & Air offers flexible financing options that can help spread the cost over time while you benefit from lower energy bills.
4. Right-Size Your System
An oversized or undersized HVAC system wastes energy and money. If you’re not sure what capacity your home needs, learn about sizing your HVAC system properly. A correctly sized system will operate more efficiently and last longer.
5. Consider Your Heating & Cooling Needs
Western North Carolina’s climate is unique. Before upgrading, understand which HVAC system works best for WNC homes. The right choice for your area can improve comfort and reduce operational costs.
What Changed and Why It Matters
The expiration of Section 25C marks a significant shift in federal energy policy. The credit was designed to encourage homeowners to invest in efficiency upgrades by lowering the financial barrier. Now that it’s gone, the incentive landscape relies more heavily on:
- State and utility programs (like Duke Energy rebates)
- Lower long-term utility savings to justify the upfront investment
- Financing programs to make affordability easier
For Western North Carolina homeowners, this makes the timing and planning of an HVAC upgrade even more important. While the federal incentive is no longer available, a new energy-efficient system can still deliver substantial utility savings over its 15–20 year lifespan.
Your Next Steps as a WNC Homeowner
If you’re considering a new HVAC system in 2026, here’s what to do:
- Get a professional assessment. Ward Plumbing, Heating & Air’s technicians can evaluate your current system and recommend the best upgrade path for your home and budget.
- Confirm rebate eligibility. Before purchasing, verify what rebates you qualify for through Duke Energy and any local programs.
- Explore financing. If upfront cost is a concern, ask about our flexible financing solutions to make the upgrade more affordable.
- Schedule your installation early. Planning your upgrade now ensures you can complete it while rebate programs are still available and before the busy summer cooling season begins.
If you’re in Sylva, Waynesville, or Asheville, Ward Plumbing, Heating & Air is ready to help. Contact us today for a free consultation on your HVAC upgrade and to discuss available incentives.
Ready to put real money back in your pocket this year? If you’re in Sylva, Waynesville, or Asheville, Ward Plumbing, Heating & Air is ready to help. Contact us today for a free consultation on your HVAC upgrade and to discuss available incentives.
Just Say The WARD.
Frequently Asked Questions About 2026 HVAC Tax Credits & Rebates
Is there any federal tax credit for HVAC equipment in 2026?
No. The Section 25C Energy Efficient Home Improvement Credit, which previously covered 30% of HVAC equipment costs, expired on December 31, 2025. No new installations qualify for this credit in 2026. If your system was installed before December 31, 2025, you may be eligible to claim the credit on your 2025 tax return.
Can I still get Duke Energy rebates for a new heat pump?
Yes. Duke Energy North Carolina offers rebates up to $500 for qualifying heat pump installations in 2026, depending on efficiency tier. Your system must meet ENERGY STAR certification standards (SEER2 ≥15.2, HSPF2 ≥7.5), and you must complete a Home Energy Check within 24 months of installation.
What are the ENERGY STAR requirements for heat pumps?
Heat pumps must meet these ENERGY STAR criteria to qualify for Duke Energy rebates:
- SEER2 rating: 15.2 or higher (Seasonal Energy Efficiency Ratio 2)
- HSPF2 rating: 7.5 or higher (Heating Seasonal Performance Factor 2)
These ratings indicate superior efficiency compared to standard equipment.
What is a Home Energy Check and why is it required?
A Home Energy Check is an energy assessment completed by a qualified auditor. Duke Energy requires this check to verify that your installed equipment meets efficiency standards and qualifies for rebate programs. It must be completed within 24 months of your system installation.
Are there any state or local rebate programs beyond Duke Energy?
Yes. North Carolina’s HOMES and HEEHR programs (funded by the Inflation Reduction Act) offer rebates up to $8,000 for heat pump installations, but eligibility is limited and primarily targets low-to-moderate income households. Ward Plumbing, Heating & Air can help you determine if you qualify for these programs.
What if I can’t afford the upfront cost of a new HVAC system?
Ward Plumbing, Heating & Air offers flexible financing options to make energy-efficient upgrades more affordable. Spreading the cost over time allows you to benefit from utility savings while paying for your new system.
How much can I save on utility bills with a new energy-efficient HVAC system?
Savings vary based on your current system’s age and efficiency, your home’s size, and your heating and cooling habits. A new ENERGY STAR certified heat pump typically saves 30–50% on heating and cooling costs compared to an older, standard-efficiency system. Over a 15–20 year system lifespan, these savings can add up significantly.
Should I wait for new federal incentives to be announced?
There’s no way to predict if or when new federal tax credits will be introduced. Given the current policy environment, relying on future incentives is risky. Taking advantage of current Duke Energy and state rebates now is a more reliable strategy.
What’s the difference between a heat pump and traditional central air conditioning?
A heat pump provides both heating and cooling by moving warm air in or out of your home, depending on the season. Traditional central air conditioning only provides cooling. Heat pumps are more energy-efficient and are particularly well-suited to Western North Carolina’s climate. Learn more about different heating options for WNC homes.
How do I know if a new HVAC system is right for my home?
Every home is different. Factors like square footage, insulation, window quality, and local climate all affect your HVAC needs. Discover how to choose the ideal HVAC system for your Western North Carolina home or contact Ward Plumbing, Heating & Air for a personalized assessment.
Can I get rebates for just a new air conditioning system without replacing my heating system?
Yes. Duke Energy offers rebates for qualifying central air conditioning systems that meet ENERGY STAR standards. You don’t have to replace your entire system—though a complete upgrade is often more efficient.
